International students - an economic gain for Germany
IW Study
Every year of international students contributes around eight times more to the revenue of public budgets in the long term than the state invests in them on balance. These are the findings of a study conducted by the German Economic Institute (IW) on behalf of the German Academic Exchange Service (DAAD). The approximately 80,000 international students alone who began their studies with the intention of graduating in 2022 will pay almost 15.5 billion euros more in taxes and duties over the course of their lives than they receive in benefits from the German state. If the retention rate remains stable, this effect will be repeated with each new intake.
"The new IW study impressively demonstrates the economic importance of international students for Germany. Although most universities do not charge tuition fees, international students make significantly higher contributions to our society over the course of their working lives than Germany invests in their studies and beyond. International students are an asset to our country in many ways, academically of course, but also economically," said DAAD President Prof Dr Joybrato Mukherjee.
"Investing in the education of international students strengthens the skilled labour base and thus economic growth in Germany in the long term. They help to overcome the challenges of demographic change. In addition, the investments are highly profitable from a public sector perspective and strengthen public budgets in the long term," added IW Director Prof Dr Michael Hüther.
Investments amortise quickly
According to the IW study, investing in international students pays off for Germany after just a few years: If 40 per cent of a cohort remain in the country after graduation, their taxes and contributions will cover the costs of higher education just three years after graduation. If the retention rate remains stable, each new cohort of international students brings in 15.5 billion euros more in taxes and duties for the public budget than the state has to spend over their lifetime. Even with a retention rate of only 30 per centincome would exceed expenditure by 7.4 billion euros in the long term. If 50 per cent of a cohort were to remain in Germany in the long term, the surplus would even amount to 26 billion euros.
Germany attractive in international comparison
Germany is one of the most important destination countries worldwide and is the most popular non-English-speaking country to study in. According to DAAD estimates, around 405,000 international students are currently studying in Germany. According to a recent DAAD survey, around 65 per cent of students intending to graduate plan to stay in the country. According to an OECD study, Germany currently has the highest retention rate of international students in the world, together with Canada: ten years after starting their studies, 45 per cent of students are still in the country.
Close cooperation essential for successful integration
In order to attract as many international students as possible to the German labour market, the DAAD believes that an attractive range of scholarships for international talent, close cooperation between universities, companies and policymakers and a welcoming culture are essential. "We must provide international students who familiarise themselves with Germany during their studies and want to stay here after graduation with the best possible support in starting a career," said the DAAD President. The DAAD promotes the successful transition into the labour market, particularly with its skilled workers initiative.
Background
The IW study is the first to comprehensively analyse the economic contribution of international students from the start of their studies to retirement. The overall economic and fiscal effects are analysed on the basis of three retention scenarios: In the first scenario, 500 out of 1,000 students stay in Germany after graduation, of which 375 remain in the country until the end of their lives. With a medium retention rate, 400 students stay for ten years and 200 for the long term. In the variant with a lower retention rate, 300 students remain in Germany for ten years and 75 permanently. According to the OECD, the current retention rate in Germany is 45 per cent.
The IW study was funded by the Federal Ministry of Education and Research (BMBF) as part of the DAAD Skilled Labour Initiative.
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